Outsourcing is not particularly new, and certainly not a technology specific situation. The term is new, but the practice goes back at least to the first cities, and probably to the first use of tools.

I believe there are two things working against the long term viability of IT outsourcing. First is the economic model. We are seeing a shift in the distribution of wealth. In the US, wealth is becoming concentrated in ever smaller percentage of the population. As this happens, the ability to sell a service such as off shore data processing becomes a smaller market. After all, just how much IT does Bill Gates or the Wall heirs use? Retail outlets, one of the last sources of employment, continue to automate. The process of checking out is now routinely "outsourced" to the customer who scans his own purchases, and completes payment, without store assistance. The next step will be to make this process automatic as the customer exits. This is already in use at many gasoline stations as "fast pay". Inventory management has likewise been automated. The next question is who the customer will be if no one is employed to manufacture or sell the products.

The second is Moore's Law. We tend to think of it as applying to personal computers, but in fact it applies to all information and communications technology. Each new advance further reduces the number of people required to do the same amount of work. While new markets are opening, it may seem that there is an increased demand for technologists, but this is an illusion. Once the new market reaches saturation, we see the impact of increasing capability in the hardware and software at decreasing costs. This has always been the case with automation, but in electronic technology the impact comes at greatly accelerated pace. Each year more of the design, manufacturing, and operation is automated, the reliability increases, and the number of people required for a given amount of work decreases.

During the first 100 years of telephony, the market growth hid the impact. A net gain in jobs occurred even as positions were eliminated. The advent of solid state technology in the 1960's started accelerating the trend, but it also cut costs and saw market increases. The introduction of LSI, and then VLSI, and the PC saw about a 20 year span before the two curves crossed. Even without off shoring, the number of technology jobs started dropping in the late 1990's. The millennium bug masked this, as did the dot com boom, but these only delayed the impact by a couple of years.

Evidence of this is readily apparent in the marketing approaches today. In cellular, for example, it isn't about the features or capabilities, but about the pricing plans and latest device appearances. Considering that widespread cellular usage is less than a decade old, that is a significant indicator. While coverage areas and total users has increased, the number of RF engineers involved in the design and implementation of new service areas has been steadily decreasing. There never was a serious service or repair aspect. Phones are replaced based on style rather than any fault with an existing instrument. The sales aspect has almost no technical knowledge requirement.

Each new release of application software puts more capability into the hands of the user. Web support is becoming a routine aspect of the administrative assistant job, and the number of administrative assistants is decreasing. Web development is likewise becoming more of a packaged solution than a ground up effort. Understanding the code is becoming less important as low cost tools allow users to create with no coding knowledge.

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